What do I do about selling a house?

[Wade Lippman]

My MIL died last year and left my wife and BIL with house. It is in poor condition in a depressed neighborhood. Realtor says it is worth between about $46,000. We have finally remove the huge piles of debris and are ready to sell it. We really really really want to get rid of it quickly.

BIL has a friend that rents out houses and is willing to give us $40,000 for it. Unfortunately he is unable to get a mortgage, or even put down a down payment, and wants us to take back a 100% mortgage at a the lowest commercial rate. BIL trusts him totally. I don't. It is easy to see situations where he rents it and the tenant trashes it. Having no means to fix it back up, he give it back to us and we now have less than when we started. Or he gets ill and do the routine maintenance he intended. Tenant gets angry and leaves. Again we are screwed.

I would rather sign with the realtor and put it on the market for $39,000. At that price it should sell quickly; even after the realtor's commission it still seems like a better deal than selling to the friend, as we don't have to worry about getting it back from the purchaser.

As a compromise I suggested we sell to the friend for $40,000. My BIL should give my wife $18,000 and keep the mortgage. Whatever happens after that is his problem; the extra $4,000 is compensation for the risk. My wife thinks that is a great idea, but of course if it went bad we would help BIL out. NO, the whole point of it is that we have taken less than half and are done.

So, what do I do? (or at least, try to do...)

Just as an aside, her only other probate asset is an old car that BIL wants to give to a friend who needs a car but can't afford one. I didn't comment on that one.
It is also fair to say that BIL lives near the house, so not selling quickly might be more of a burden for him than for use, as he would have to let people in and such.

[Val Kosmider]

Couple of options:

One, stay out of it. Family stuff never goes well. Let wife and BIL do what they are happy with.

Two, I wouldn't do a deal with anyone who puts no equity into the deal. That leaves you with all the risk, and only half the reward if it works out favorably.

Three....selling at $40,000 to the friend in exchange for $18,000 to your wife doesn't work as the buyer has no cash, and can't get a mortgage, leaving your BIL out $18,000 and a LOT of hard feelings when the deal with his friend falls apart. (How can the friend be in the real estate rental biz but has no cash and can't get a mortgage?).

Four: list it for $46 ish, and be prepared to hit the first bid above $40 K. Not to pooh-pooh $5-6,000, but in the overall scheme of things, it just isn't worth fiddling around with.

I wouldn't list it at $39,000 just to preserve the friendship between your BIL and his friend who is "willing" to pay $40,000...if he had the ability to do so ( he apparently doesn't, so it is irrelevant, but keeping the peace never hurts)

Good luck. Swift disposition to an "external" buyer would broadly be my advice.

[Scott Hackler]

List it and the car for sale ASAP. Want to sell them quick, price them lower. Split the proceeds and move on. How much is the car worth? If it is more than $1000, and if the BIL wants to donate the car to a friend then subtract half the reasonable value of the car from his half of the house sale. He gets what he wants (for the car) and your wife gets made whole financially. Any no down, owner carry is risky enough IF the purchaser is going to live in the residence. If the prospective buyer has already stated he would be renting the property, then it is a double risk since he doesn't have equity (both monetary and pride in his personal residence) in the home. It is always guaranteed to be back to our wife and BIL in case of default, but trust me...from a landlords perspective...renters can destroy a property. If the damages are enough h could just walk away and leave you hanging. Not to mention the friend favoritism from your BIL's perspective.

Sell em and move on

[Matt Day]

Sell it. List it for $46 and if I were you take anything above $38 or so after negotiating the price, to just to get rid of it. A couple grand hopefully isn't worth the trouble of holding onto a property and all that goes with it.

Don't be surprised when you get a lowball of $35.

[Doug Ladendorf]

I'm with everyone else here. Sell to a real buyer and DO NOT take on ANY financing. I've seen that go wrong and you don't want to be there.

[eugene thomas]

Sell for cash in hand.... you bil plan. Risk 100% rewad. 0% well most likly.....

[glenn bradley]

Its their mom, they get the winning vote. ;-)

[Myk Rian]

NEVER sell to friends or family. It will not turn out well.
Sell it for the $39k and be done with it.

[Mike Henderson]

I agree with the advice here. Get the cash and run. Never take a mortgage, especially from someone who can't get a mortgage from anyone else - there's a reason no one else will give them a loan.

I'd list it for mid 40's and be willing to drop as soon as someone makes an offer.

Any deal that involves family has the potential to destroy relationships.

Mike

[Mike Chance in Iowa]

Exactly what Mike wrote. The other options will not end well.

[Jim Matthews]

No matter how it turns out, if you get into this game - you will lose.

Get an executor, and pay for the 'insulation'.

[Bryan Rocker]

Sorry for your issues but we went through this just last year. It took us 7 20 yard dumpsters to get the house cleaned out, not liveable, both my kids wanted it but it needed a complete rehab down to the studs and foundation work. The neighbor offered to buy it from us and we did. It was the best thing we ever did, yes it was hard emotionally but it was the best thing. As to the friend wanting you to back the mortgage, HELL NO. NEVER mix business with pleasure. It will ruin your friendships trust me.......

I hope you find a way to dispose of it and keep your wife happy.

Bryan

[Shawn Pixley]

List it for $39k and get out from under it.

[Chris Padilla]

It all comes down to risk assessment and the level of risk you are willing to take on.

[Kent A Bathurst]

List it for $39k and get out from under it.

Yep. Everything about this thing sounds a bit suspicious. Your BIL sounds like a great guy, I guess, but he wants to give away family assets that aren't his. He can get a mortgage, buy it outright, and do as he likes from there.

If your "get out quick" number is, say, $38k, then let him buy it for $36 - 37. The "family discount". But - don't take back any sort of mortgage, at any rate.

Then run.

[Fred Chan]

Wow! 100 percent financing at lowest commercial rate. If I could only buy a bunch of houses with such good terms I'd be on my way to being a rich man.

[Greg R Bradley]

I have to agree that it is Wife's & BIL's decision as it is their house but if you want to help them make the right choice here is some info.

People that buy houses to rent them out as a business normally pay ALL cash. If they are able to do that as a business they have to have the assets to back that up and work through the problem times. I know several people that loan them money for the times when they don't have all cash and the going terms for that are 25% down and 10% interest assuming they have other assets to use for a guarantee. If they don't have other assets, it is 50% down. They have all had to take houses back and lost money at 25-50% down.

ANY reasonable investment property in this area should have lots of buyers at those terms. In other words, if the real estate agent says she can sell it for $46k there should be a cash buyer for $38k. Your area might be different.

My conclusion is the BIL's friend is looking for a HUGE discount. It sounds like he might be a wanna be real estate investor. Those guys mostly fail and anyone loaning them money needs to be in a strong equity position.

[Wade Lippman]

I have relayed all this good information to my wife. It is up to her to discuss it with BIL.
I have also made the suggestion that we sell to the friend for $37K if he buys for cash.

BIL is an overly nice guy. I expect he is willing to take a great risk to remain a nice guy.

[Dom Garafalo]

A growing option for a quick sale is to auction it to the highest cash bidder using a auction company that specializes in this type of sale. It often attracts "Flippers" with ready cash or "Do it Yourselfers" with ready cash looking to buy their first house on the cheap.

[George Bokros]

List the house for $44K and be willing to take $38-39K and run. It is up to your wife but I am sure she is looking to you for some guidance.

We were fixing up my MIL house to sell a few years ago and had still had some work to do and money to invest when we got an offer from my wives cousin to buy the house. We considered what we still had to invest to finish painting the inside, new kitchen floor, new bathroom floor, refinish the bath tub, new garage doors, etc and the cousins offer was what we would net after we invested the reminder of the fix up expenses so we sold and were glad to have it gone. An empty house is a burden, insurance will not cover loss unless the windows and doors are boarded up so we were glad to have it off our hands.

[Joe Tilson]

My brother and sisters and I have decided we do not want our spouses deciding what happens to our mothers estate, if and when she goes home to glory. In order to keep peace between your wife and yourself, I would stay out of it. I stayed out of my wife's family affairs when they settled their her parents estate. Things worked out very well.

[Steve Rozmiarek]

I'm not disagreeing with any of the other points already listed here, but there is an opportunity to make a money in the real estate market if you are in the position to seller finance. The banking fix that washington pulled several years ago left self employed people having a hard time getting a mortgage. There are smart, fiscally responsible people who are currently unable to get a mortgage because of a bureaucracy. A seller looking for an investment could turn that $40k house into far more over time. Of course this would only be interesting for the right seller.

[Art Mann]

My brother and sisters and I have decided we do not want our spouses deciding what happens to our mothers estate, if and when she goes home to glory. In order to keep peace between your wife and yourself, I would stay out of it. I stayed out of my wife's family affairs when they settled their her parents estate. Things worked out very well.

The original poster is talking about a situation in which he may accept a mortgage from someone of questionable ability to pay. It isn't reasonable for him to stay out of this decision, unless his and his wife's finances are entirely separate. Otherwise, your council to stay out of it is good. I am also in a situation where my MIL is dying but the estate is much larger and more complex. I trust my wife to do what is right and smart.